Dominique Strauss-Kahn, the former chief of the International Monetary Fund, has been detained by French police as part of an investigation into a suspected prostitution ring.
A prosecutor on Tuesday said Strauss-Kahn is being questioned in the northern French city of Lille as a suspect over alleged cross-border prostitution ring in France and neighbouring Belgium that has implicated police and other officials.
Investigators are seeking to discover if prostitutes were paid using corporate funds from a large French construction company.
Police have questioned prostitutes who said they had sex with Strauss-Kahn during 2010 and 2011 at a luxury hotel in Paris, a restaurant in the French capital and also in Washington DC.
Prostitutes in sex parties
"He could easily not have known, because ... I challenge you to distinguish a naked prostitute from any other naked woman"
- Henri Leclerc, Strauss-Kahn's lawyer
Two men with ties to Strauss-Kahn have been put under preliminary investigation in France on charges including organising a prostitution ring and misuse of corporate funds.
Strauss-Kahn's name surfaced in the investigation last fall and his lawyer has asked that Strauss-Kahn be allowed to tell his side of the story.
One of Strauss-Kahn's lawyers has said that the former French presidential hopeful did not know that the women at parties he attended were prostitutes.
"He could easily not have known, because as you can imagine, at these kinds of parties you're not always dressed, and I challenge you to distinguish a naked prostitute from any other naked woman," Henri Leclerc told French radio Europe 1 in December.
French newspapers have dubbed the investigation "The Carlton Affair" after the name of the expensive Lille hotel where some of the meetings took place.
This is Strauss-Kahn's latest run-in with police over alleged sexual misconduct.
He resigned from the IMF in May 2011 when he was charged with raping a New York hotel maid.
New York prosecutors dropped the case against him in August because the woman had undercut her credibility by lying about her background and changing her account of her actions right after the alleged attack.
She says she was truthful about the encounter and is pursuing her claims in a lawsuit.
The scandal effectively ended his hopes for the French presidency.
In a separate case in October 2011, French prosecutors refused to pursue an allegation by a young French writer of attempted rape by Strauss-Kahn.
The Paris prosecutor's office dropped the investigation into writer Tristane Banon's, claim that Strauss-Kahn tried to rape her during a 2003 interview for a book the then-23-year-old was writing, saying they could not send him to trial because it happened too long ago.
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